First Regular Session Sixty-ninth General Assembly STATE OF COLORADO INTRODUCED LLS NO. 13-0310.02 Duane Gall x4335 SENATE BILL 13-272 SENATE SPONSORSHIP Schwartz, HOUSE SPONSORSHIP Fischer, Senate Committees House Committees Agriculture, Natural Resources, & Energy A BILL FOR AN ACT Concerning modifications to energy demand-side management programs, and, in connection therewith, creating a pathway for inclusion of innovative and emerging technologies to offset the consumption of natural gas. Bill Summary (Note: This summary applies to this bill as introduced and does not reflect any amendments that may be subsequently adopted. If this bill passes third reading in the house of introduction, a bill summary that applies to the reengrossed version of this bill will be available at http://www.leg.state.co.us/billsummaries.) Current law rewards the use of renewable energy resources for generating electricity and encourages efficiency measures that reduce demand for both electricity and thermal energy generated from fossil fuels. But current law does not comprehensively encourage the production of thermal energy from renewable sources when offsetting fossil fuels used for heating and cooling. The bill addresses this disparity by adding renewable energy technologies to the measures that may be deployed under existing law as part of a gas utility's demand-side management (DSM) program. In addition, the bill: Requires investor-owned retail natural gas utilities to devote 30% of their DSM budgets to support the installation of renewable energy technologies that cannot be net metered; Caps gas utility DSM program expenditures at 4% of total full-service retail sales; Directs investor-owned retail natural gas utilities to submit, and the public utilities commission (PUC) to consider, proposals to include their most cost-effective and consistently marketable DSM products and services in their rate base, thus freeing up a portion of their existing DSM budgets for emerging technologies; and Urges the PUC, in any proceeding concerning DSM programs of electric utilities, to draw on the information and experience gained in connection with gas DSM programs as modified by the bill to promote emerging technologies that offset electricity consumption. Be it enacted by the General Assembly of the State of Colorado: SECTION 1. Short title. This act shall be known and may be cited as the "Energy Efficiency and Renewable Energy Jobs Act of 2013". SECTION 2. In Colorado Revised Statutes, 40-1-102, amend (6); and add (8.5) as follows: 40-1-102. Definitions. As used in articles 1 to 7 of this title, unless the context otherwise requires: (6) "Demand-side management programs program" or "DSM programs program" means: (a) An energy efficiency, conservation, load management, and or demand response programs or program; (b) A program that promotes, or rewards customers for, the installation of any technology, including a renewable energy technology, that reduces or offsets a customer's consumption of electricity or gas but, due to inherent physical or practical factors, cannot be net metered; and (c) Any combination of these the programs listed in paragraphs (a) and (b) of this subsection (6). (8.5) "Highly cost-effective", with reference to a natural gas demand-side management program or related measure, means having a benefit-cost ratio that meets the standard for a highly cost-effective measure established by the commission under section 40-3.2-103.5. SECTION 3. In Colorado Revised Statutes, 40-3.2-103, amend (2) (a) as follows: 40-3.2-103. Gas distribution utility demand-side management programs - rules - recovery of costs. (2) As part of the rule-making proceeding required by subsection (1) of this section, the commission shall: (a) Adopt DSM program expenditure targets equal to at least one-half of one percent, but not exceeding four percent, of a natural gas utility's revenues from its full service customers in the year prior to setting such targets; SECTION 4. In Colorado Revised Statutes, add 40-3.2-103.5 as follows: 40-3.2-103.5. Gas DSM through renewable energy - legislative declaration - highly cost-effective technologies - emerging technologies - rules - recovery of costs. (1) The general assembly: (a) Finds that: (I) Demand-side management programs focused on energy efficiency, conservation, load management, and demand response are effective in reducing demand for energy produced from fossil fuels; and (II) Similar reductions in demand can result from the installation of customer-sited renewable energy technologies that have not previously been included in the definition of DSM and that cannot be net metered; (b) Determines that: (I) In view of the potential benefits, it is prudent to include appropriate renewable thermal energy technologies in DSM programs and to allocate a reasonable portion of ratepayer funds to investment in renewable thermal energy technologies that reduce fossil fuel consumption; and (II) Some DSM programs have proven themselves not only cost-effective, but highly cost-effective and anticipated to be in the market for more than one biennial DSM plan, justifying their consideration for cost recovery through base rates; and (c) Declares that the commission's adoption of rules in accordance with this section is in the public interest. (2) (a) Notwithstanding section 40-1-102 (5) (c), the commission shall measure the cost-effectiveness of DSM programs and technologies that offset gas consumption using a utility cost test that does not include participant expenditures. (b) Effective July 1, 2013, the commission shall direct each investor-owned retail natural gas utility to allocate at least thirty percent of its DSM program funding to the development of renewable thermal energy technologies. The commission may review the appropriateness of this funding level on or after July 1, 2018, and adopt rules to adjust it based on the commission's findings as to market conditions and changes in the price of natural gas. (3) On or before September 30, 2013, the commission shall commence a rule-making proceeding to adopt rules that: (a) Identify and define renewable thermal energy technologies that cannot be net metered but are effective in reducing fossil fuel consumption. These technologies include, at a minimum: (I) Ground-sourced heat pumps; and (II) Active solar thermal systems that use a liquid to collect and store heat; (b) Establish standards and procedures to determine highly cost-effective gas DSM programs; and (c) Direct each investor-owned retail natural gas utility to submit, as part of its next rate case, proposals for creating a regulatory asset or collection through base rates for any DSM program that is anticipated to be in the market through more than one biennial DSM program plan and that is highly cost-effective as determined by the commission. The commission's standard for determining whether a DSM program is highly cost-effective must be designed, as nearly as practicable, to include the most cost-effective programs. (4) (a) As part of the rule-making proceeding under subsection (3) of this section, the commission shall consider and, if appropriate, adopt rules to enable, the most cost-effective means of administering DSM programs by or on behalf of one or more investor-owned retail natural gas utilities that each serve fewer than two hundred thousand customers. (b) In any proceeding concerning DSM programs of electric utilities, the commission shall give the fullest possible consideration to measures to encourage the development and deployment of emerging renewable thermal energy technologies that offset electricity consumption, drawing upon the information and experience gained in the course of the rule-making proceeding under subsection (2) of this section. (5) A utility's funding of renewable thermal energy technologies in accordance with the rules adopted under this section is eligible for review and supplemental bonuses in accordance with section 40-3.2-103 (6). SECTION 5. In Colorado Revised Statutes, amend 40-3.2-105 as follows: 40-3.2-105. Reporting requirement. By April 30, 2009, and by each April 30 thereafter, the commission shall submit a report to the business, labor, and technology committee of the senate, or its successor committee, and the business affairs and labor committee of the house of representatives, or its successor committee, on the progress made by investor-owned utilities in meeting their natural gas and electricity demand-side management goals. The report shall include any recommended statutory changes the commission deems necessary to further the intent of sections 40-3.2-103, and 40-3.2-104, and 40-3.2-103.5. SECTION 6. Safety clause. The general assembly hereby finds, determines, and declares that this act is necessary for the immediate preservation of the public peace, health, and safety.